The BRICS bloc of developing nations is reportedly set to unveil a new guarantee fund aimed at significantly boosting investment and lowering financing costs across its member states. Sources familiar with the matter indicate that the initiative, to be backed by the New Development Bank (NDB), is a centerpiece of Brazil's current BRICS presidency and is expected to be announced at next week's summit in Rio de Janeiro.
This proposed BRICS Multilateral Guarantee (BMG) mechanism is modeled after the World Bank's Multilateral Investment Guarantee Agency (MIGA). Its creation comes at a time of shifting global investment patterns and aims to provide stability amidst economic uncertainties, particularly concerning U.S. policy.
The BMG, incubated within the NDB, has already received technical approval from member states, with final sign-off from BRICS finance ministers considered a formality. Importantly, the fund will not require additional capital from member countries at this stage. Instead, it will leverage existing NDB resources to channel investment into vital projects within developing nations.
While an initial funding value for the guarantees hasn't been disclosed, officials involved in the discussions anticipate a substantial multiplier effect. They expect that for every dollar in guarantees provided by the NDB, five to ten dollars in private capital could be mobilized for pre-approved projects.
"This is a politically significant guarantee instrument," one source commented, emphasizing its symbolic importance. "It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today's global needs."
The technical preparations for establishing the fund are projected to be completed by the end of this year, with pilot projects expected to begin receiving guarantees in 2026. This initiative addresses a common challenge for developing nations within the BRICS group: attracting large-scale private investment for crucial areas like infrastructure, climate adaptation, and sustainable development. Officials believe that guarantees from the NDB, which holds a higher credit rating than most member countries, will help mitigate perceived risks for institutional investors and commercial banks, thereby unlocking significant private capital. The story is from the Reuters.